WASHINGTON/BRUSSELS -- The United States and the European Union have significantly strengthened sanctions on Russia over Ukraine, with Washington for the first time directly targeting Russia's banking, military, and energy sectors.

U.S. President Barack Obama announced the new sanctions on July 16 over what he called a failure by Russia to take concrete steps to stop an escalation of violence in eastern Ukraine.

"I've repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine," Obama said, adding that he had said this directly to President Vladimir Putin.

"What we are expecting is that the Russian leadership will see once again that its actions in Ukraine have consequences."

The Treasury Department used its authority for the first time under a separate executive order to sanction several top Russian banks and energy companies.

Undersecretary for Terrorism and Financial Intelligence David S. Cohen said in a statement that “because Russia has failed to meet the basic standards of international conduct, we are acting today to open Russia’s financial services and energy sectors to sanctions and limit the access of two key Russian banks and two key energy firms to U.S. sources of financing, and to impose blocking sanctions against eight arms firms and a set of senior Russian officials.”

U.S. firms would still be allowed to do business with the firms, according to the Treasury Department, but U.S. entities would be prohibited from issuing new debt longer than 90 days' maturity. A senior administration official said that the measure would restrict their access to capital markets because of the dominance of the U.S. dollar worldwide.

The list did not include Russian state-controlled natural gas company Gazprom nor its CEO, Aleksei Miller. The company has cut its supplies to Ukraine over a payment dispute.

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The shift in targeting sectors of the Russian economy indicates a harder approach to Russia by the Obama administration as the Ukraine crisis continues with no resolution in sight.

Past rounds of sanctions had mostly focused on sanctioning individuals and banning them from traveling to the United States.

The Treasury Department simultaneously sanctioned five more Russians under that authority, including Sergei Beseda, commander of the Fifth Service of the Russian Federal Security Service (FSB); Duma Deputy Chairman Sergei Neverov; Minister for Crimean Affairs Oleg Savelyev; Aleksandr Borodai, prime minister of the self-proclaimed Donetsk People's Republic; and Igor Shchegolev, an aide to President Putin.

The administration also announced sanctions against the self-proclaimed Donetsk and Luhansk "people's republics"; Fedosia Enterprise, a Crimean oil company; and several Russian arms manufacturers, including Kalashnikov. (The Treasury Department clarified that existing owners of the weapons in the United States would not be subject to sanctions.)

In a first reaction to the U.S. sanctions, Putin warned that the move will take relations with Russia to a "dead end" and damage U.S. business interests in his country.

Putin told reporters on a visit to Brazil, "Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end, and cause very serious damage."

EU Less Decisive

Meanwhile, European Union leaders also agreed to expanded sanctions against Russia, after a marathon meeting in Brussels.

But the EU, which has a far deeper economic relationship with Russia than the United States, was more restrained.

An EU statement at a summit in Brussels said the measures will target "individuals or entities who actively provide material or financial support to the Russians decision-makers responsible for the annexation of Crimea or destabilization of eastern Ukraine."

The statement said that European countries would agree on names and entities by the end of the month.

The 28 leaders also agreed to suspend new investments in Russia by the EU's European Investment Bank and European Bank of Reconstruction and Development.

Russian Deputy Foreign Minister Sergei Ryabkov responded in a statement to Interfax news agency, saying, "We condemn those politicians and officials behind such actions, and confirm the internation to adopt measures, that will be received in Washington quite painfully and strongly."

With reporting by Luke Johnson in Washington and Rikard Jozwiak in Brussels

Rikard Jozwiak

Rikard Jozwiak covers the European Union and NATO for RFE/RL from his base in Brussels.​ Write to him at rikard.jozwiak@gmail.com